All posts tagged money and the brain

Because I often host money workshops, I do not have the experience that my workshop attendees (mostly intergenerational members of families) have. It was a delight to be able to participate in a workshop hosted by a therapist.

In this money workshop, we all pretended to be a family. Although none of us were related, it did not take long for emotional dynamics to come into play between us.

The first direction was to take the bills out of our wallets and give these bills to the host. Immediately questions of trust were unearthed. Would the money be returned? Should I hold back any bills? Who cares, it’s just money, right? were just some of the dynamics that came up.

Next, the host asked for a volunteer to count the money the host was holding. That brought comments like: “How can we trust the counter?” “Are they going to keep the money?” “Can I count the money too to be sure they counted it correctly?”

Next, the host asked for a volunteer to divide the pile of money into seven uneven piles (matching the number of participants.) The host then picked up a pile, gave it to the first person, picked up the next, gave it to the second person and continued to distribute the piles like this until all the piles were distributed. As you can imagine, this created quite a stream of comments as some felt short changed while others felt like they got a good deal from the initial amount they had given the host. One person felt like a weight had been taken off his shoulders as the pile he got was more than what he had borrowed from another player to give to the host (he did not have any bills in his wallet.) One person left the game frustrated that this was “going nowhere. You’re just moving money here and some of it was my money that I no longer have.”

The host then told us to put any money that we had above the smallest amount a player had in their hand, in a pile on the floor. Each participant now had the same amount of money in their possession. Tension turned to relief and awkward laughter.

The host asked everyone to talk about their favorite charities which we did, one at a time. The host then had us talk about what should be done with the money in the pile on the floor. Should it be returned to the participants or should it be given to one of the charities mentioned by us? We had seven minutes to reach consensus. We did not reach consensus. The host then had everyone pick a number from a hat. He called out a number and the person holding that number was identified. The host then told us we had another five minutes to reach a consensus about what to do with that money or it would go to the person holding the number he called. Still no consensus so the host gave the money in the middle of the floor to the person whose number he had announced.

Two people were okay with the outcome; two people were outraged that their money had been “taken from them”; one person asked what the person who was awarded the money was going to do with their new money? The person with the money said they would either give it to the charity they had defended or they would return it to each participant so they could be made whole. But the group had to come to a consensus on which choice to make. The decision was to give it to the organization that the person holding the money had talked about.

We then debriefed on the exercise, paying close attention to the emotions we exhibited and the feelings we had during the various sections of the money exercise. I found myself noting reactive behaviors triggered by feelings I had as a child around money.

Money exercises are a wonderful way to experience beliefs and emotions around money. You can identify patterns of behaviors that are unproductive and introduce new patterns of behaviors that encourage productive habits and behaviors around your money. Often, we hide and bury these feelings but they can come up in the oddest places.

If you would like to explore a money exercise with your family or group, let me know. I would be delighted to develop a money workshop for you.

Debt is back, big time. The tightening that occurred after the crash of 2008 has been replaced by debt approaching $1 trillion dollars. And it shows no signs of abating.

Student loans and credit cards may be good for the issuers who capture more revenue through high interest loans and late fees but they are creating a pool of consumers sinking deeper and deeper into debt.

Credit card debt has already surpassed the pre-2008 crash levels, per WalletHub. Thirty-four billion dollars was added to credit cards in the last quarter of 2016 alone WalletHub found. To add to that increase, in the same period there was a record low payback of debt.

In my conversations with Millennials, I hear a range of concern about their debt. Some do all they can to avoid debt by delaying college until they can afford to pay for it or work for companies that will pay for their college education. I know one Millennial who has $300,000 in student loans. She told me that it is the price she has had to pay to attain her law degree. Although the debt does add stress to her life, she does not want it to confine her life to just working. She figures she will have this debt all her life and hopes that the government will one day forgive it.

What have we done, where we have created a society saddled with debt as a way of life? Is this a sustainable model? I do not think so. It may seem to work for a generation but it is not a sustainable model for financial strength. Ongoing and mounting debt gnaws at the edges of the fabric of freedom, independence and self-worth. Debt is a burden. It may not direct all our actions but it directs our thoughts on how we think of ourselves.

Tell me your thoughts and how you deal with debt in your own life. I would love to hear your thoughts on this mighty subject.

Saving money is difficult for some people. It’s just too easy to part with those bills taking up space in your wallet. Plus, those bills are worn and small denominations. Why keep them when you can just get rid of them on a mindless transaction.

There have been several studies, and a recent one, found in the Journal of Consumer Research, stated that: “The physical appearance of money can alter spending behavior. Consumers tend to infer that worn bills are used and contaminated, whereas crisp bills give them a sense of pride in owning bills that can be spent around others,” concluded authors Fabrizio Di Muro an Theodore j. Noseworthy.

Participants in several studies were given worn or new bills and their behaviors were observed as they went shopping. The participants favored the newer and crisper bills and they favored larger bills. By favoring, the participants were less eager to part with the crisper bills and would exchange worn bills for goods even if a crisper bill was of a smaller and more appropriate denomination.

So, if you want to save money, give yourself crisper bills. If you want someone else to save the money you give them, give them crisper bills as well.

Look at how you use your worn versus crisper bills and if you do not have crisp bills, ask the cashier for them when requesting change or ask your bank teller for crisp bills when they give you cash. Tell me your experience with your worn and crisp bills. Which do you favor?

I was reading some quotes I have and wanted to share with you a few of the money quotes. I find them to be thought provoking. I offer them to you in the same spirit in which I have read them:

Money, it takes a lifetime to build it, an instant to lose it. What are you doing to safeguard your money?

Money, it is easier to make money than it is to keep it. With the marketing machine constantly reaching out to us, we have to know the purpose of our money or we will most likely part with it too easily.

The secret to money is knowing what yours is for. Yes, yes and yes to this one! You make good choices because of the heroes, models, mentors and experiences who guide your thinking in the proper way. Who are your money and financial role models?

Money without meaning is like candy without a wrapper. It’s too easy to devour without restraint.

This year, money and I will be friends, and not part company as easily and as often as last year. Put the processes in place and use the tools to make this so. Measure your behaviors so you can tweak your progress.

Let me know which quote resonates with you. If you have another money quote you like, let me know that too.

When asked about what impact their money would have on the lives of their heirs, a recent study found that 65% of the responders said there would be too much focus on material things, 55% said their heirs would not understand the value of money, 52% said their heirs would spend beyond their means, and 50% said that their heirs’ initiative would be ruined by money. It looks like money does carry emotional baggage with it.

How do you teach your children about money when it can be a source of contention within your own homes or even worse, you hardly talk about it because you and your partners’ views on money are so different?

To illustrate this, here is an example of an exercise a family devised for themselves. The parents were frustrated with their children’s casual view of money. They decided to reverse roles with their children for one night. One evening, the parents told their two children that the next allowance was going to be treated differently. Rather than give an allowance outright for whatever the kids wanted to use it for, this time the allowance was going to be used to treat the family to a night out with dinner and a movie. “Cool”, the kids thought, until they were reminded their chore money was being used for this.

As their parents explained, this was going to be a “see how the other half lives” experience. “Cool”, the kids again thought as they felt a generous splurge washing over them as they decided where to eat and what movie to see. Cool, right?!

At dinner the children ordered their usual meals. Their parents, instead of ordering their usual fare, decided to order like their children did when the meal was paid for by the parents. In addition to the entrée, the parents each ordered appetizers and dessert. Once they got to the theater, the parents said they wanted more food and ordered large popcorn, large drinks and extra candy, just like their kids would.

Like their children, the parents did not eat everything. They left most of their entrée on the plate while eating all the dessert. They spilled the drinks at the theater. They tossed some of the candy and popcorn out too…just like their kids. Cool, right?!

Their children were shocked that their parents left food on their plates, food they ordered but didn’t want to eat. The kids couldn’t believe their parents wanted more to eat at the theater. When they saw how much had been spent that evening, the kids were blown away at the total they, the kids had to spend.

This turned out to be a life lesson for the kids on the value of money to them. It changed their perspective and behaviors with money. Sometimes all it takes is a new perspective. Cool, right?!

Your children want guidance on how to best deal with their own money. Give them experiences with built in lessons for them.

Most people find that the sides they use the most are spend and earn. A big drop off occurs before I see either saving or investing as the next sides people attend to with investing and saving last.

Where does donating fit? Surprisingly, it is not last. It comes before investing. The World Giving Index found, that as a percentage of population, the U.S. ranked ninth in 2014 among approximately 140 countries. This index found that about 68% of the U.S. population donates money. The Gallup Poll found that as of April 12, 2015, 55% of adults have money invested. USA Today, in March of 2015, found that 66% of the population saves but 47% reporting that they only have enough to cover living expenses for 90 days or less.

That is important information which illustrates how fragile and tenuous people’s financial lives are.

How do you address money at home so these sides are attended to in ratios that sustain a healthy lifestyle? What S.I.D.E.S. do you attend to and in what percentages?

Research has found that many of the top earners have their money allocated to the 5 S.I.D.E.S but they don’t share healthy stories or teach their children or grandchildren about productive money habits. The next tier of earners, tend to allocate money to earning, investing, spending and donating, with only extra money, when it comes, allocated to saving. They don’t teach their children or grandchildren much about money either.

Below these thresholds, people skew their financial allocations towards spending, earning and donating only if there is extra. Saving is rarely attended to. This oversight can lead to lifestyle upheavals should a disability or loss of income occur.

Have you ever seen someone eat too much? If not you should. Why? Because it will teach you something about money.

Let’s say you are at a restaurant and you see scrumptious item descriptions on the menu? What do you choose? It can be difficult to decide which yummy sounding items to order. Instead, the tendency can be to over order so as not to miss on “a good thing.” Restaurants are aware of this. Some have learned the art of carefully scripted descriptions and titles on their menus to guide our decisions. How do you stop yourself from ordering too much? Once the food is placed in front of you and your dinner companions, how do you know when to stop ordering? It’s interesting that the tendency is to eat more in an animated conversation or environment. Restaurants know this also and cater their environment to create the mood they find most profitable for their patrons. But I digress.

While eating at a restaurant with friends, how do you know when to stop eating? Do you consciously stop before you are full, when you have ingested enough for your body to efficiently use, do you eat until your plate is clear? Food itself does not tell you when to stop. It is up to us. We have to make the decision to stop eating. Without our own guidelines to eating, we rely on the multi- billion dollar industry geared to helping people figure out good food choices-Paleolithic, Atkins, the 3 Hour diet, Vegan, Macrobiotic, Mediterranean, Beverly Hills, Weight Watchers, Jenny Craig, Mayo (Clinic not naise),Protein, Lo Carb, High Fat, and don’t forget the French Women don’t Get Fat diet.

Money has a similar predicament. What is enough? How do you know you have enough? How do you stop from spending money? What are your guidelines around money? Like food, without our own healthy guidelines to money, there is a multi-billion dollar industry built to money from your pocket to someone else’s. And if you don’t have the cash, you need not worry; a credit card or two, or three will do just fine. Do you have a trusted set of guidelines you follow with your money?

It’s no wonder many people have a difficult time with money. They have not assessed value to it other than consuming and paying their necessities. Their money is already allocated to mobile data plans, car payments, vacation funding, technology, mortgages, food, and other must haves. There is nothing else left for things like investing or saving. Of course a little is put away into retirement plans at work. But not enough.

What can be done to transform this cycle of consuming? Fortunately we know that our mind works best when it has a system to follow consistently and diligently.Try this two part exercise: the next time you purchase groceries use a credit card and note your reaction to your transaction. Do you look at the total? Do you look at the price of any of your food items? If so, which ones? When you buy groceries again, pay in cash. What is your reaction to the transaction now? Did you pay more attention to the total? How did you feel letting go of your money and handing it to someone else? Note the different reactions you had in buying your food with a card and with cash. Which made you more aware of a loss of money? For most, using the credit card is more removed and has a less emotional feeling of ownership and loss while using cash can produce feelings of doubt about the purchase or loss of something you owned.

Becoming more aware of your spending habits is a great first step to creating a framework around your money.

Tell me what you discovered in doing the exercise I mentioned. I would love to hear from you.

If I asked you what the purpose of your money was, what would you say?

I find that when I do ask that question, it is met with an abrupt silence or a quick what do you mean? My money is for me to do with as I want. And what is it you want to do with it? I ask. Give me the things I want. And as I ask them what they want, there response is usually fairly vague or focused merely on spending.

To help your money become a tool to benefit you, you must conscientiously apply and know how you will allocate your money to these five sides.” You must control your money or you will be at risk of having your emotions drive your use of money.

For this blog I want to share with you seven pithy quotes on money for you to reflect on. As you read each one think about its relevance to your life

Money:

It can take a lifetime to build and a year to lose

It’s easier to make money than it is to keep it

The secret to keeping your money is knowing what yours is for

You make good choices because of the heroes, models, mentors and experiences who guide your thinking in the proper way

Money without meaning is like candy without a wrapper. It’s too easy to devour without restraint.

This year, money and I will be friends, and not part company as easily and as often as last year.

Commitment is a promise and pledge to something. Make your commitment to the purpose for your money that strong.

Which statement got you to think about your money in a more profound way? Which statement made you reconsider an aspect to your money that is not in alignment with your intention with that money?

I find that #5 is a zinger for me today as I can find myself easily justifying an expense I don’t need but act upon. I like the reminder that #7 gives me to have a pledge with my money and to honor that pledge.